(FORTUNE Small Business) – When I started my book company, it was all about the notion of art as something for the privileged few," says Nicholas Callaway, gesticulating while he talks, talking while he walks on his way to a late breakfast at Pastis in Manhattan's meatpacking district. Callaway, 50, has silver-blue eyes and a rakish Hugh Grant hairdo (like his Hamptons neighbor Chris Whittle), and dresses like English royalty--vested, tweedy, with a tie pin. "Now I'm interested in bringing art to the widest imaginable audience, and I guess we are succeeding."

You might say that. Callaway Arts & Entertainment recently published The English Roses--the first of five children's books by Madonna--in 30 languages in 100 countries on the same day. Despite some cringing notices ("a charmless, didactic book ..." wrote Slate. "Cliché follows cliché"), it debuted at No. 1 on the New York Times children's picture-book bestseller list and remains there as we speak. "It's No. 1 in France," Callaway continues a little later, over a bowl of oatmeal and cup of cappuccino. "It's in the top five on the children's bestseller list or the combined bestseller list in virtually every one of the 30 editions. It's the fastest-selling children's book by a first-time children's author in history. It's working." He opens his mouth, tips his head up a notch. "Hah-hah-hah!"

As the second son of legendary entrepreneur Ely Callaway (Callaway Vineyards, Callaway Golf), Nicholas grew up knowing he must choose his own path. "It was one of my father's mantras that family members should not be in business together," Nicholas says--a lesson Ely learned from watching his own father toil in the shadow of a brother, who ran Callaway Mills, a textile company. After Harvard and a stint working at a gallery in Paris, Nicholas decided that what he really wanted to do was publish limited-edition art books (his older brother, Ely Reeves Callaway III, decided to build sports cars). His father, who died in 2001, was not impressed. "I don't think he ever thought my business would succeed," says Nicholas. He had some winners, among them Georgia O'Keefe's One Hundred Flowers in 1987 and Madonna's Sex (a grownups' picture book) in 1992; both sold more than a million copies. But between hits, growth stalled. "He was right," Nicholas says of his father. "Book publishing does not have a good business model now. But creating and owning intellectual property can be an excellent business model."

So Nicholas looks for books he can leverage. His most valuable property? David Kirk, author and illustrator of the wildly popular Miss Spider books (more than four million copies sold). Callaway made Kirk an offer he couldn't refuse in 1994 ("Drive a soft bargain," was Ely's sage advice, "so generous that at no time will Michael Eisner come up to him at a party and say, 'Forget Callaway, I can make you a better deal'"), and through partnerships with Nickelodeon, Scholastic, and Target he has built a multimedia, multiproduct empire. Books begat brooms, buckets, footstools, and an animated series on Nick Jr. "We're growing and we're profitable" is all he'll say about his ten-person, privately held firm; that and, chuckling, "I think ours is bigger" than brother Ely's Callaway Cars business.

What next? No sale, though Nicholas has had offers. "We've been rehearsing for some 20-odd years," he says. "Now the performance is beginning. We're able to address a worldwide audience as a tiny little company. Hah-hah-hah!"